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5 Point Checklist when Switching Vendors

One of the biggest reasons APAC companies outsource their payroll functions is for specialized expertise. Because of the many cultures, languages, and regulations these companies deal with, staying compliant is a challenge – and failing can be expensive. Fines and penalties can add up quickly, and using an outsourced payroll provider reduces the risk.

But, what if the payroll vendor isn’t performing as you expected? Or what if you find another vendor whose services better fit your needs? It may be time for a change. Now, switching payroll vendors isn’t as simple as changing the vendor who provides your printer paper. It may indeed be the right choice, but it’s important to make the change carefully and correctly. Here are a few tips on how you can make a payroll vendor change go smoothly:


Talk to your current vendor

If you’ve been unhappy with your current provider’s service, it may be tempting to tell them off, and leave in a huff. But, it’s important to resist that urge, since your existing vendor has an important role to play. Here are some important things to discuss:

  1. Do you have a contract? If so, under what conditions are you allowed to break the contract, and what are the penalties for doing so?

  2. How much notice does the vendor require?

  3. What processes are in place for securely transmitting your payroll information to the new vendor?

  4. What steps should you take to make sure none of the vendor’s employees still have access to your information?

  5. How long will the vendor store your records, and how will that information be secured?

Be aware that, at this point, your current vendor may try to persuade you to stay. If you’re leaving because of price issues, it may be worthwhile to see if they can offer you a better deal. However, if you’re leaving because of bad service, ask yourself how much you can reasonably expect that to improve.


Lay the groundwork with your new vendor

Next, talk to your new vendor. The first step is to set a start date. Other important discussion points include:

  1. What do you need from us to begin providing service? This will likely include your banking information, employee tax forms, etc.

  2. What do you need from your current vendor, and what processes do you have in place for getting that information?

  3. What problems have you experienced with these transitions in the past, and how have you handled them?

  4. What support will you provide for employees who have problems with their paychecks?


Communicate the change to your employees

The next step is to explain the changes to your employees. Changes affecting their pay understandably make employees anxious, so it’s important to let them know what to expect. Make sure that, at a minimum, you cover these points:

  1. When the switch will happen

  2. What, if anything, the employee needs to do

  3. What steps you’re taking to make sure the transition goes smoothly

  4. Whom they should contact if their pay is incorrect


Make the switch

When you finally make the switch, it’s important to monitor the transition. Whether formally or informally – through discussions in the breakroom, for example – see how things are going from the employee’s perspective, and be prepared to address any concerns quickly. It’s also important to keep an eye on the company bank account, and make sure there are no double withdrawals or other discrepancies.


Conduct an after-action review

Once you’ve been through a few pay cycles with the new vendor, take a look back, and think about what went well – and what didn’t. Document these lessons, and refer to them if you ever need to change payroll vendors again.

Changing payroll vendors can be a hassle. However, that’s no reason to continue ties with a vendor who isn’t meeting your needs. With proper planning and communication, the process should go smoothly. And, even if there are a few bumps, that’s a small price to pay for having a payroll vendor you love.

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